Patrick Bolton and Mathias Dewatripont

Published 1992

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In this paper the internal organisation of firms is reduced to the organisation of a communication network. In the presence of information communication and processing costs it is important to design rules guiding which members of the firm ought to communicate with one another on a regular basis. Restricting access to some agents of the firm is an important way in which overall information communication costs can be economised. The problem of design of an internal organisation can then be seen as a problem of determining who is allowed to communicate with whom.